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According to a survey1, Switzerland ranks No. 1 among the most attractive countries when economic indicators alone are taken into account.
What income should an expat in Switzerland expect?
Moving from one country to another means an expat worker loses his or her bearings. Between changes to living costs and a new labour market, it is difficult to predict your purchasing power (at least initially). Fortunately, Switzerland is an economically attractive host country and expat salaries are fully in line with this trend.
180'000
With an average salary of more than CHF 180,000 per year1, expats arriving in Switzerland increase their income by more than 50%, which is a good reason to consider a certain level of comfort.
Estimate your salary in Switzerland
Nevertheless, the reality can vary significantly from one expat to another. Depending on the canton, sector of activity, size of the company, or even the skills required, the disparities can be huge.
To help you in your procedures or negotiations, the Swiss Federal Statistical Office (FSO) has made available this very practical salary calculator: Salarium.
Thanks to a cross-sectional survey of more than 750,000 wage indications recorded in 2014 from private companies in Switzerland, each user can estimate of the value of his or her profile on the labour market. Estimates are provided on a gross monthly basis before deducting taxes and other social security contributions.
Salary breakdown in Switzerland
Between the gross monthly salary and the net salary received, there is obviously a difference (which may be less for international civil servants). Here we explain which contributions may be deducted:
AVS/AI/AC/APG
Social insurance
This refers to the various types of ‘solidarity’ insurance that are used to finance the 1st pillar: Old age/Survivors, Disability, Unemployment and Loss of Earnings. They are mandatory and indexed to gross salary at the rate of 4.2% for AVS, 0.7% for AI, 0.225% for APG and 1.1% for AC (up to CHF 148,200.- and 0.5% after)2.
LAA
Accident Insurance Act
Non-Occupational Accident Insurance is mandatory for all employees working at least eight hours a week. It is specific to each employer and varies according to the salary and/or the insurer.
LPP (or pension fund)
Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans
The deductions related to the Federal Law on Occupational Retirement, Survivors' and Disability Pension Plans, otherwise known as LPP, are essential. They make it possible to contribute to the 2nd pillar with the objective that the income level should be at least 60% of the last salary upon retirement.
Occupational Pensions Act
| 25 - 34 years | 7% |
|---|---|
| 35 - 44 years | 10% |
| 45 - 54 years | 15% |
| 55 - 65 years | 18% |
The minimum contribution rate changes with age and may vary depending on the pension fund.
For the mandatory LPP, the insured salary is a maximum of CHF 84,600 (from which the coordinated earnings of CHF 24,675 must be deducted), but a minimum of CHF 3,525.
On the other hand, the employer may extend the amount of wages insured beyond CHF 84,600, but this is the supplementary insurance to the LPP.
Example 1: Christian/53 years/CHF 95,000 annual gross salary
Christian's gross annual salary exceeds the maximum amount of wages that have been insured (CHF 84,600). The coordination amount (CHF 24,675) will therefore be deducted from this upper limit to get coordinated earnings of CHF 59,925. Since Christian is 53 years old, the rate applied is 15%, or a LPP contribution of CHF 8,988.75, to be divided between him and his employer. Over a 12-month period, Christian will have to pay: CHF 8,988,75/2/12, or CHF 375/month.
Example 2: Virginie/28 years/CHF 65,000 annual gross
Virginia's annual salary is less than the maximum amount of wages that have been insured. The coordination amount can therefore be deducted directly to obtain coordinated earnings of CHF 40,325 (CHF 65,000 - CHF 24,675). At the age of 28, Virginie will be charged a rate of 7%, or a LPP contribution of CHF 2,822.75, to be divided between her and her employer. Over a 12-month period, Virginie will have to pay: CHF 2,822,75/2/12, or CHF 118/month.
Taxes
Taxation at source
Depending on the cantons and your work permit, an additional line showing your income taxed at source may appear on your salary slip. If so, the net salary shown will be your final after-tax income. Otherwise, you will have to think about making provisions to pay your taxes at the end of the year.
Is there a minimum wage in Switzerland?
Even if the question may seem meaningless to an expat, given the figures mentioned above, it is quite legitimate considering that a move abroad is first and foremost a family project. If a spouse decides to work in Switzerland, he or she will certainly not have the same salary conditions or benefits.
That said, there is no formal minimum wage under Swiss law, but collective labour agreements (CLAs) specific to certain sectors of activity may have a minimum wage in place. It is vital to find out for sure from a prospective employer whether such an agreement exists.
More information on employment law in Switzerland
Gender pay gap
According to the FSO, Switzerland needs to make progress in terms of the gender pay gap.
According to the latest Swiss Earnings Structure Survey (ESS) conducted in 2016, this gap was 12%, a reduction of 3 points compared to 2012, but far below the levels of the Scandinavian countries in particular which form the benchmark in this area.
This gap is mainly due to the absence of a law regulating parity, as may be the case in Iceland, for example, where financial sanctions are applied in the event of unequal pay.
Bonuses and benefits: making dreams a reality
Bonuses and other benefits are part of the employee's life in Switzerland. No specific rules or laws exist to streamline their allocation. Each company has its own way of operating.
For some, the bonus is negotiated as a percentage of the annual salary and depends on the achievement of objectives, for others it is purely discretionary. The amounts vary greatly depending on the sector of activity, the financial health of the company, rank, length of service, etc. and unfortunately for some, it does not exist at all.
1 HSBC (2017). Expat Explorer Survey. See https://www.expatexplorer.hsbc.com/survey/country/switzerland
2 2018 figures.
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